The online grocery market in India isn’t flooded with too many competing players. There are only two prominent players — BigBasket and Grofers, with Amazon dipping its toes in the segment with a recent investment. BigBasket is, however, the current leader and has now raised $45 million from venture debt firm Trifecta Capital to maintain its dominant position in the market. The fresh capital has been raised in order to match the company’s expenditure requirements. The company has also confirmed the investment by Trifecta.
While the company has raised this debt funding, two people aware of the development said that BigBasket is also in talks to a host of investors to raise at least $100 million in a new funding round. This fresh capital infusion will be used to set up new warehouses and facilities for reprocessing fruits and vegetables, and for strengthening the cold chain infrastructure.
Nilesh Kothari, co-founder at Trifecta Capital said in a statement:
They (BigBasket founders) have leveraged economies of scale, technology, supply chain and logistics, backward integration and product mix to create a viable, high growth business that is delivering significant value to customers.
Unlike other online grocery businesses, they are a full stack player and have already broken even in key markets like Bengaluru and Hyderabad.
Hari Menon, co-founder and CEO of the company, said in a statement:
We have a clearly identified use case for debt. We are present in 25 cities and continue to optimize our supply chain. A significant part of our business is fresh fruits and vegetables, the bulk of which is sourced directly from farms. It is crucial that we maintain the quality right up to the last mile.
We are in the last leg of a pilot which will ensure that all fruits and vegetables are maintained at constant temperature and thereby improve shelf life of the produce by almost 10 days. This will be done using large-scale equipment such as pre-coolers and ventilators. Funding such capex requirements is best done through debt.
BigBasket is one of the best-funded home-grown online grocers. It has raised more than $220 million in various funding rounds from investors including Abraaj Group, Bessemer Venture Partners, Sands Capital, Helion Venture Partners and International Finance Corp. The company aims to clock revenue of Rs1,800-2,000 crore in FY17.
Trifecta Capital, which was founded by Nilesh Kothari along with former Canaan Partners executive Rahul Khanna, has a target corpus of Rs500 crore. The fund has so far invested in 18 companies including PaperBoat, Rivigo, Urban Ladder, Industrybuying, OneAssist and Urban Clap.